Wells Fargo Securities 2012 Industrial and Construction Conference - - PowerPoint PPT Presentation

Wells Fargo Securities 2012 Industrial and Construction Conference May 8, 2012 Deb Butler Executive Vice President Planning and CIO

Agenda

• First Quarter Recap
• Improvements in Operating Metrics
• Looking Ahead

Revenue $2.8 Billion, up 6% RPU $1,611, up 5% Volume 1,730,800 units, up 1%

1Q 2011 RPU Volume 1Q 2012

$2,620 $2,789 $139 $30 1Q 2012 Revenue $ in Millions & y-o-y Percent Change Components of Revenue Growth $ in Millions

First Quarter Results: Operating Revenue

First Quarter 2012 vs. 2011

Merchandise $1,496 +13% Coal $766 (6%) Intermodal $527 +9%

Current Railway Volume

Second Quarter through Week 18 (May 5, 2012)

670 688 698 2010 2011 2012

Units (000) Quarter-to-date Change in Units QTD12 vs. QTD11

3% 1%

12% 7% 5% 5% 1%

• 2%
• 11%

Automotive Intermodal Agriculture Chemicals Paper Coal MetCon

First Quarter Results: Operating Expenses

First Quarter 2012 vs. 2011 ($ Millions) Net Increase $24 Million / 1%

• $42

+ $21 + $24 Depreciation + $8 + $13 Materials and other Purchased services and rents Compensation and benefits Fuel

First Quarter Results

($ Millions except per share)

Net Income Diluted Earnings per Share

$325 $410 $1.23 $0.90 Change vs. Prior Period: + 26% Change vs. Prior Period: + 37%

2011 2012 2011 2012

Agenda

• First Quarter Recap
• Improvements in Operating Metrics
• Looking Ahead

Improving Overall Service

Composite Service Performance By Quarters 2011 - 2012

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 72.2% 76.6% 78.2% 76.3% 82.8%

2011 2012

Increasing Velocity

By Quarter 2011 - 2012

16 17 18 19 20 21 22 23 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

20.9 21.1 21.4 21.4 23.4

Miles per Hour

2011 2012 Better

Train Speed

2011 through April 27, 2012

18.0 19.0 20.0 21.0 22.0 23.0 24.0 25.0

NS Train Speed (miles per hour) Better

Source: As reported publicly to the AAR

20 21 22 23 24 25 26 27 28 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

26.2 23.9 23.6 24.5 21.8

Average Hours

2011 2012

Keeping Cars Moving

Terminal Dwell By Quarter 2011 - 2012

Better

Terminal Dwell

2011 through April 27, 2012

17.0 19.0 21.0 23.0 25.0 27.0 29.0 31.0 33.0

NS Terminal Dwell (hours) Better

Source: As reported publicly to the AAR

Improving Productivity

1st Quarter - 2012 vs. 2011

Train & Engine Service Overtime Reduced 15% Re-Crews Reduced 35% Equipment Rents (Velocity Driven) Reduced 9% Locomotives In Service Reduced 3% Fuel Consumption Reduced 2% Gross Ton Miles per Gallon Improved 1% Gross Ton Miles per Train Hour Improved 4%

UTCS – Movement Planner

Unified Train Control System

• Improved locomotive utilization
• Improved schedule adherence
• Increased capacity
• Disaster recovery

capability

• Improved Network Velocity; 2-4

MPH

• Estimate completion

by end of 2013

Remote Intelligent Terminal (RIT)

• Real Time Inventory Reporting
• Improved Workforce Productivity
• Improved Asset Utilization
• Estimate completion by end of 2012

LEADER

• Next Phases
• In Service

Agenda

• First Quarter Recap
• Improvements in Operating Metrics
• Looking Ahead

Coal Impact of mild temperatures and competition from natural gas Continued strength within the domestic metallurgical market due to robust domestic demand for steel Weaker demand in European market, partially offset by new steam coal

• pportunities

Improving world met coal prices and tighter supply Intermodal Increasing opportunities for highway conversion amidst tightening truck capacity Favorable international trade patterns Growth in premium Merchandise Project growth in crude oil and waste products Growth in ethanol to terminals Increasing demand for materials in natural gas drilling operations Stronger steel/automotive production and new business gains

Business Outlook

Future Track Drivers

• Safety
• Service Improvement
• Revenue Growth
• Fuel Efficiency
• Workforce Productivity
• Asset Utilization

Thank you